The Death of the Blockbuster Has Been Greatly Exaggerated

Over the past few years, a number of critics of biopharmaceutical companies have predicted the demise of the industry because of its dependence on blockbusters. A blockbuster is defined as a branded prescription drug that generates annual revenues of $1 billion or more. Discovering a blockbuster should be a good thing as it is a medicine that is prescribed to millions of people because of its beneficial effects on disease and suffering. However, many major blockbusters, like Zoloft, Lipitor and Fosamax, have already lost or are about to lose their patent protection and it is thought that there is a dearth of new compounds in the drug makers’ pipelines with blockbuster potential to take the place of older products.

A few years ago, no less than the former head of the FDA, Dr. David Kessler, slammed the blockbuster mentality saying: “The model that we’ve based pharmaceutical development on the past ten years is simply not sustainable. The notion that there are going to be drugs that millions of people can take safely, the whole notion of the blockbuster, is what has gotten us into trouble.” Melody Petersen was even more strident in an opinion piece titled “A Bitter Pill” that appeared in The Los Angeles Times in 2008: “For 25 years, the drug industry has imitated the basic business model of Hollywood. Pharmaceutical executives, like movie moguls, have focused on creating blockbusters. They introduce products that they hope will appeal to the masses, and then they promote them like mad.”

Sorry. It’s hard for me to envision my old boss, former Pfizer CEO, Hank McKinnell “taking a lunch” to discuss strategy with the heads of Paramount and Twentieth Century Fox.

First, it must be pointed out that a company doesn’t set its research priorities based on whether or not a program can eventually yield a blockbuster. Such predictions are difficult, if not impossible. For a new medicine to be successful, it must be safe, effective and meet a major medical need. Assuming that 15 years after starting a new R&D program, the new compound finally gets approved, it then needs to get a favorable label from the FDA, reasonable pricing from those who reimburse drug costs, and acceptance by physicians and patients. A great example in the difficulty of predicting blockbusters, interestingly enough, is Lipitor. When Warner-Lambert was seeking a partner to help sell and market what proved to be the biggest selling drug of all time, the company approached Pfizer. The Pfizer marketing team’s analysis said that the peak sales potential of this medicine would be $800 million – a significant amount, but not exactly blockbuster territory. However, the actual peak in worldwide sales for Lipitor was in excess of $13 billion. What the marketing team did not anticipate were the results of the long-term studies with Lipitor, completed some years later, which showed the importance of the value of this compound in preventing heart attacks and strokes.

Nevertheless, one might think this point is moot. Based on the pronouncements of the doomsayers, one would think that the industry has lost the capability to produce major new products. However, two reports that appeared last week indicate that this is not the case and further, suggest that the strategy of working on projects meant to discover compounds that meet major medical needs can still lead to blockbusters. This was evident in two reports last week. The first came from Jonathan Rockoff and Ron Winslow in The Wall Street Journal, an article highlighted in this blog last week. Although Rockoff and Winslow focused on the increase in FDA approvals likely to occur over the coming years, they had a table which highlighted a dozen exciting new medicines that have either been recently approved or are in late-stage development. They also included predicted peak sales of these compounds, which ranged from $1.1 – $4.3 billion, annually – blockbusters all.

A second paper, “The New Face of Blockbuster Drugs” by Elizabeth Schwarzbach, Ilan Oren and Pierre Jacquet in “IN VIVO: The Business and Medicine Report” more than affirms the views in The Wall Street Journal article. Their detailed analysis shows that there will be more blockbusters in 2015 than there had been 10 years earlier (132 vs. 101). Furthermore, these will bring in on average 15% more revenue apiece.

This is very encouraging news. Yet, when many of these programs started, it wasn’t clear if the compounds that were discovered would even work in the clinic, much less emerge as blockbusters. So what has happened to create these potential blockbusters? In the late 90s, industry leaders realized that for new products to be successful in the future, they had to address major medical needs or at least be highly improved over existing therapy. R&D priorities were altered to reflect the needs of the future and
the products now emerging from R&D pipelines meet these needs. Dr. Janet Woodcock, the FDA’s drug
division director, recently celebrated this revamped strategy: “ We’re seeing a lot of innovation, much more than in recent memory.”

There are still many diseases where new treatments are needed: obesity, Alzheimer’s disease, antibiotic resistant infections, etc. The number of people affected by these diseases is so great that any new medicines that are shown to be safe and effective in the treatment of these diseases won’t just be a great benefit to patients around the world, they will also be blockbusters.

7 Responses

Okay…I know this blog is meant to put a positive spin on the pharma industry, but you cannot really expect those of us that have worked in the industry to believe that upper management doesn’t do this…”First, it must be pointed out that a company doesn’t set its research priorities based on whether or not a program can eventually yield a blockbuster.”

As a medicinal chemist and project leader for a large (Top 5 in sales) pharma company this in fact did/does happen. Projects would be “parked” because some upper management VP (marketing) did not feel the market was large enough for a particular medication (not worrying about whether the treatment would actually be beneficial). This may not happen in every instance; but I know for a fact that on several occasions the prioritization based on blockbuster sales does in fact happen. The altruistic opinion that pharma executives just simply look at unmet medical need is naive, comical and flatly wrong.

Thanks for a frank expression of your views. I have only worked at one company in my career and so perhaps my views are skewed. To be candid, I always welcomed commercial input for our discovery research portfolio. Scientists don’t have a background in this field. The commercial insights as to what was needed in a new compound to truly distinguish it from existing and future therapy was important. It is not unusual for a scientist to say: “There’s a new mechanism that seems to play a role in elevating blood pressure. We should go out and get an inhibitor of this mechanism and we’ll have a big drug.” The commercial colleague would invariably say: “Why do we need a new pill to lower blood pressure? In 12 years when you MAY have a compound approved by the FDA, you will be competing against generic versions of some of the safest, most effective and best-known drugs of all time. How will you distinguish your compound?” If you answer was simply that it’s a totally new agent and that it should be interesting, you’d be excused from the room!

However, it must be stressed that in discovery research, it takes the same amount of resources to discover a drug to treat an orphan disease as it does to discover a drug to treat millions of people. Given the size of a company like Pfizer, we obviously focused on the latter.
Let me give you some examples of programs that I was involved with that show that research priorities were not set solely by blockbuster potential. Pfizer had a successful antifungal program that resulted in Diflucan (fluconazole) which was a blockbuster in terms of sales. The team next pursued an antifungal which was designed to go after tough-to-treat fungal infections. This led to Vfend (voriconazole). Commercial was never very high on this project and sales projections were underwhelming. However, it was thought that this would be an important medicine for physicians and patients. As often happens, Vfend turned out to be a life-saving compound whose sales in 2010 were $825 millon.
A similar story can be told for Chantix (varenicline). Sales projections for this smoking cessation compound were abysmal. The commercial division let it proceed because they thought it was an important compound for physicians to have in order to help patients stop smoking. It turned out to be more successful than was envisioned and 2010 sales came to $755 million. Not bad for a niche product.
But perhaps the most interesting example is with the JAK-3 inhibitor, tasocitinib. This program was originally begun to find a compound that dampened down the immune system in such a way that it would prevent the rejection of transplanted organs (heart, kidney, liver) more effectively and in a safer way than existing therapy. Again, this was thought to be a niche opportunity. However, when early clinical trials looked encouraging, we decided to explore the use of tasocitinib in another autoimmune disease, rheumatoid arthrits. The results proved very exciting and the clinical program focused on this indication. While not yet approved, I have seen sales projections for tasocitinib by marketing analysts of $ 2 – 4 billion.
The point that I am trying to make is that you can’t base a discovery research portfolio solely on the premise that every project is going to yield a blockbuster. Historically, blockbusters have proven difficult to predict and if you base your program selection only on this you’ll make a lot of poor choices. What you must do is have programs that are founded on a strong scientific rationale, that meet a significant medical need and which can lead to an improvement over exiting therapies.
In 1950, George Merck said, “We try never to forget that medicine is for the people… If we do that, profits will follow.” I believe that this is still true.

One more point, I do not fully believe your assertion that it costs just as much to develop a drug for an orphan disease as it does to treat millions of people. The discovery costs, maybe – but that is a small portion of the total cost. The clinical trial cost would be widely different. A drug to treat an orphan disease would not have the same enrollment numbers as one that treats millions of people. Thus, the overall costs would not be the same.

Russ,
It is always difficult to predict sales of a drug accurately, particularly when the new drug is a first-in-class therapy. At Pfizer, it was though that Tagamet sales would never reach $100 million for the same reason you give. – John